Marriage Penalty Relief
A married couple may file a joint tax return
and be treated as one taxpayer. Joint filers pay taxes on
their total taxable income. (Although a couple may file
separate returns, this usually results in higher taxes than
filing jointly.) A “marriage penalty” exists
when the combined tax liability of a married couple filing
jointly is greater than the sum of their tax liabilities
computed as though they were two unmarried filers.
The 2001 tax legislation introduced two
changes designed to gradually alleviate this marriage penalty,
but they were not scheduled to begin taking effect until
2005. The first provision called for raising the joint filer
standard deduction (a deduction allowed to individual taxpayers
who do not itemize deductions on their tax returns). The
second change increased the size of the 15% income-tax bracket
for joint filers. The 2003 Act accelerates this tax relief.
First, the new law increases the basic
standard deduction for joint filers to twice the standard
deduction for single filers, effective for 2003 and 2004.
Second, the 2003 Act increases the size of the 15% bracket
for joint returns to twice the size of the 15% bracket for
single returns, again for 2003 and 2004. After 2004, the
basic standard deduction and the 15% tax bracket for joint
filers will go back to what they would have been under the
2001 law.
| Calendar Year |
Joint Return Standard Deducation
as a % of Single Return Standard Deduction under 2003
Act |
Top of 15% Joint Bracket as
a % of Top of 15% Single Bracket under 2003 Act |
| 2003-2004 |
200% |
200% |
| 2005 |
174% |
180% |
| 2006 |
184% |
187% |
| 2007 |
187% |
193% |
| 2008 |
190% |
200% |
| 2009 and after* |
200% |
200% |
| * The increases in the
basic standard deduction and in the 15%tax bracket for
joint filers are scheduled to expireafter 2010. Source:
NPI |
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